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Finance / Legal quick question

Discussion in 'Property Finance' started by Elives, 30th Sep, 2015.

  1. Elives

    Elives Well-Known Member

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    i saw this post from somersoft it was posted in 2005

    "Say, I will build 2 houses a year, sell one and keep one long term, under the Company's name. This is to generate some equity/capital reserves for the company to be self-financing as well as boost its future borrowing capacity, in/by itself. In this way, my wife and I are no longer required to act as gaurantors for the company's loan."

    is this correct / does this still work?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    I wouldn't say it's boosting it's own borrowing capacity, no.
     
  3. Greyghost

    Greyghost Well-Known Member

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    Depends on the lender. Some may require director guarantees regardless of the overall company serviceability and portfolio lvr and profitability..
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Is it possible? Yes it is possible to build and sell and the company will be able to show income and this would help in borrowing, but I have yet to see a lender that will not require a personal guarantee from all directors. Perhaps it would be possible as the assets of the company build up.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I've never seen a lender that doesn't want a guarantee from each director.

    A similar parallel would by SMSF lending. Initially the whole idea was that you weren't required to give a personal guarantee for a loan to a SMSF for property. This has changed over the last year or so to the point where it's hard to find a lender that doesn't want a personal guarantee.